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Report Finds OC Property Owners Overpay $13.8M

OCEAN CITY –Tax differential made further head way this week with a presentation on the issue to the Mayor and Council Monday night followed by a presentation to the County Commissioners Tuesday afternoon.

The Mayor and Council were presented with a final report on tax differential Monday night, giving them a clearer picture of what a tax differential could mean for Ocean City and what steps need to be taken to achieve it.

In October, the Mayor and Council approved a contract with Municipal and Financial Services Group (MFSG) so that a clearer picture regarding tax differential facts and figures could be obtained. Steven Kaii-Zeigler represented MFSG Monday night as he presented the Mayor and Council with their report.

According to Kaii-Zeigler, Ocean City tax payers should not be required to pay $13,894,610, which essentially is the figure representing the tax differential.

The report reads, “Our analysis indicates that $104,921,971 of the property tax collected should be paid by all County residents including those in Ocean City but that $13,894,610 in property taxes should not be paid by Ocean City tax payers.”

As a result of the estimated differential, MSFG recommended to the Mayor and Council a 22-cent adjustment to the countywide 77-cent property tax rate be implemented. The result of a 22-cent adjustment would be a 6-cent decrease to 64 cents per $100 of assessed valuation in the Ocean City tax rate and a 16-cent increase to 84 cents in the remainder of Worcester County’s tax rate.

Mayor Rick Meehan questioned what steps needed to be taken in order to satisfy the law with regard to the city’s request to the county for a tax differential. Kaii-Ziegler explained that a formal request to the county needed to be made prior to Jan. 1. If the request was approved, negotiations would ensue to set the tax rate for Ocean City. Kaii-Ziegler pointed out that because Worcester is a “may” county, the county has no obligation to approve the request. In the instance that the county, as they have done for several years, decides not to have a tax differential, Ocean City still has the option to go before the legislature and request that Worcester County become a “shall” county.

“The most advantageous way to implement a tax differential should be immediate,” Kaii-Ziegler said. He explained that the longer the tax differential negotiations are dragged out the more changes could occur within the jurisdiction that could affect the tax differential. He also noted that elections could occur during the lengthy period of time, causing the influx of new opinions on the matter that would likely alter negotiations.

Councilwoman Nancy Howard pointed out that if the tax differential went through, the county would no longer be providing the town with grant money that has been provided in the past. Meehan pointed out that the money received through a tax differential would far outweigh the money being received via grants.

“I think this is something we really need to do and move forward with,” said Councilman Lloyd Martin.

Councilman Jay Hancock questioned what would happen if a tax rebate were utilized in lieu of a tax differential. Kaii-Ziegler explained that a tax rebate would result in the same amount of money but that the money would be refunded to the Ocean City government instead of through tax rate decreases. The local government would then decide how to pass on the refunded money.

Kaii-Ziegler pointed out that if a negotiation with the county over tax differential is achieved, re-negotiations would still be required each year, similar to the way grant money is re-negotiated each year.

On Tuesday the caravan of tax differential information continued to Snow Hill to be presented to the County Commissioners. Meehan presented them with the information garnered from MFSG. After absorbing some of the information presented by Meehan and agreeing to review the report by MFSG, the commissioners agreed to address the issue at a later date.